PAY & COMPENSATION

Compensation’s Up, but Up Enough to Retain Staff?

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young woman seated at laptop counting money

People are leaving the profession. More money is one solution.

By CPA Trendlines Research

The AICPA’s 2023 National Management of an Accounting Practice (MAP) Survey came up with an odd statistic. Kind of hard to believe until you get the context.

The finding: the median employee turnover rate across all CPA firms is … 0 percent.

Yes, that’s a zero.

MORE: Are Accountants Charging Too Little? | ChatGPT for the Reluctant Accountant | Survey Shows Challenges, Priorities Shifting | Can Big Data Spot Financial Fraud? | Accountants Torn Over 2024 Economy, Offer Advice | SURVEY: Are You Offering the Right Services? | SURVEY: 42% of Accountants Turn Away Work Over Staff Shortages | Talent Gap Widening: Be Very Scared | CPA Biz Is Booming, But for How Long? | The 7 Categories of Cybersecurity Solutions Firms Need
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But wait. A median, as they say, is only half the story.

The bigger story – the broader context – is that more than half the responding practices had zero turnover, so the median fell at zero percent. But that goose egg doesn’t reflect the reality of firms at the other side of the spectrum.
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Tax & Accounting Profession Keeps Growing

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line chart
Overall profession employment

 

More workers, with some making quite a bit more money.

By Beth Bellor
CPA Trendlines Research

Winter doldrums didn’t seem to affect the tax and accounting profession, which saw several sectors hit new hiring highs in February.

Elsewhere in the nation, total nonfarm payroll employment increased by 275,000 in February, nudging the unemployment rate up to 3.9 percent. Professional and business services saw little change for the month.

MORE: Accounting Hiring Hits Another High | Staff Wages Hit Record High | Despite Staffing Crunch, Firms Freeze Pay Raises | Tax & Accounting Firms Grow for 9th Straight Month | Tax & Accounting Profession Grows, but Wages Don’t | Tax and Accounting Pay Advancing at 5.9% Pace | Accounting Jobs Up 4% for Year
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Overall accounting profession employment at a record 1,163,600 was up 1,000 or 0.1 percent for the month and 29,600 or 2.6 percent for the year. Employees averaged 35.9 hours per week, down 6 minutes or 0.3 percent for the month but up 6 minutes or 0.3 percent for the year. Their earnings hit a new high of $41.41, up 21 cents or 0.5 percent for the month and 34 cents or 0.8 percent for the year.
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Accounting Hiring Hits Another High

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line chart
Overall employment in the accounting profession

 

Tax prep is less than half the increase.

By Beth Bellor
CPA Trendlines Research

Is the accounting profession closing its staffing gap?

It sure seems that way, as employment hit an all-time high in January. Women fared well, too, reaching record levels in the field overall and in payroll services.

MORE: Staff Wages Hit Record High | Despite Staffing Crunch, Firms Freeze Pay Raises | Tax & Accounting Firms Grow for 9th Straight Month | Tax & Accounting Profession Grows, but Wages Don’t | Tax and Accounting Pay Advancing at 5.9% Pace | Accounting Jobs Up 4% for Year
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Nationally, unemployment held at 3.7 percent as total nonfarm payroll employment increased 353,000, according to the latest data available to CPA Trendlines Research. Of those new hires, 74,000 came in professional and business services, well above 2023’s monthly average of 14,000.
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Cornerstone Report: CPA Billing Rates, Tax Return Fees, and Client Accounting Pricing at CPA Firms | 2024

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CPA Trendlines Research Cornerstone Reports deliver instant situational awareness on the day’s hottest topics.

By CPA Trendlines Research

The billing rates, fees, and pricing strategies at CPA firms are influenced by various factors, including the type of service, the CPA’s experience, geographic location, and the client’s financial complexity.

MORE on Pricing.

As the demand for specialized financial services grows and technology evolves, CPA firms adapt their pricing models to meet client needs and ensure sustainable business growth.

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Top 20 Tough Choices for the Partner Comp Committee

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man, woman, man having serious discussion around conference table

Production isn’t all that matters.

By Marc Rosenberg
The Rosenberg Practice Management Library

Increasingly, CPA firms are adopting the compensation committee system for allocating partner income. Firms are finding that systems such as formulas, pay based on ownership percentage or pay-equal no longer work.

MORE: Voting on Ownership Basis? Three Better Methods | What Partners Do and Don’t Deserve | Tell Potentials What Partnership Takes | Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
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If there is one overarching cause for this significant trend, it’s that firms are understanding that their partners need to be something more than production machines. In addition to bringing in business, managing a client base and working billable hours (all of which continue to be important values in a compensation committee), partners need to excel in intangible areas such as helping staff grow and develop, developing specialized expertise and teamwork. The compensation committee is one of the best systems available to CPA firms to allocate income based on this diverse array of performance criteria.
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Staff Wages Hit Record High

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line chart
Payroll services staff hourly earnings

Their bosses aren’t seeing the same increases.

By Beth Bellor
CPA Trendlines Research

Going into the New Year, the average American is doing somewhat better. Earnings are up a bit; unemployment is down a bit.

MORE: Despite Staffing Crunch, Firms Freeze Pay Raises | Tax & Accounting Firms Grow for 9th Straight Month | Tax & Accounting Profession Grows, but Wages Don’t | Tax and Accounting Pay Advancing at 5.9% Pace | Accounting Jobs Up 4% for Year
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For employees in the tax, accounting and bookkeeping business, things are more complicated. Pay for employees overall? Usually down, way down. But pay for staff in every sector? All-time highs.
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Despite Staffing Crunch, Firms Freeze Pay Raises

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line chart
Average hourly earnings of all employees in the accounting profession. Hint: Don’t show this chart to recruits.

 

Millennials say compensation isn’t the most important thing. Employers say, “Heard.”

By Beth Bellor

Suppose you’re a leader in a field that has fretted for months over staff shortages. Would you put on your thinking cap, plug it in for a while and come up with… frozen pay?

MORE: Tax & Accounting Firms Grow for 9th Straight Month | Tax & Accounting Profession Grows, but Wages Don’t | Tax and Accounting Pay Advancing at 5.9% Pace | Accounting Jobs Up 4% for Year
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Strangely enough, that’s what the latest tax and accounting profession earnings data show. Compared to previous months, the trend is stagnant or even down. The only bright spot was in payroll services staff, which also added bodies – but cut hours.

(How’s that song go? If it weren’t for bad luck?)
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Tax & Accounting Firms Grow for 9th Straight Month

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line graph
Overall accounting profession employment

 

Bookkeeping is playing the tortoise game.

By Beth Bellor

Bit by bit, the accounting profession is growing. Despite a staffing shortage. Despite an uncertain economy. Despite everything, tax and accounting firms are steadily adding to headcounts.

MORE: Tax & Accounting Profession Grows, but Wages Don’t | Tax and Accounting Pay Advancing at 5.9% Pace | Accounting Jobs Up 4% for Year
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As tax and accounting professionals begin planning for the year ahead, the CPA Trendlines Research team is fielding a new survey to check the pulse of the profession, detect emerging trends, and identify the best success strategies going into 2024.
Join the Survey. Get the Results.
Click here to launch the 10-minute survey.

According to the latest data mined by CPA Trendlines Research, new highs were reached in September in employment overall, staff, CPA firm staff, bookkeeping, women overall and women in CPA firms. Staff also hit a new mark for hourly earnings.

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Staff Need Good Pay and TLC

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table of responses

They’re scarce. Here’s how to keep them happy.

By CPA Trendlines Research

It’s no news to the accounting industry that staff and professionals are hard to find and hard to keep from wandering off to some other firm.

MORE: SURVEY: Accountants Economic Outlook Brightens | The 7 Categories of Cybersecurity Solutions Firms Need | Understanding the Full Cost of a Data Breach | Research: Accounting Pros Cautiously Optimistic about Generative AI | How Auditors Can Beat AI | Why the U.S. Must Act Now to Protect Our Online Privacy
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And the law of supply and demand hasn’t failed to rule, according to the Global Talent Trends 2023 survey of the Association of Chartered Certified Accountants: Scarce employees expect a good salary, good treatment and a chance to work outside the office.

Identifying and dealing with these employees’ expectations is essential to a continuous and successful flow of business. The survey found five challenges to that flow.
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How to Boost Profits by (OMG) Sharing the Upside

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Workers of the world unite.

By Bill Penczak

About a decade ago, the managing partner of our $100 million firm and I were discussing compensation and commission for our five business development professionals. He and I were in complete agreement that there should be no cap on commission or compensation – even if that compensation level with their base and commission was at par with or even exceeded that of the partner group.

MORE: 12 Points of a Good Compensation Plan | Rate Managing Partners in Six Areas | Eight Ways Managing Partners Make a Real Difference | Five Reasons That Leaders Fail | Eleven Things Partners Must Do | Seven Keys to Becoming an Equity Partner | How to Achieve Partner Unity | The Seven Building Blocks of a Great Partnership
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“If they’re making money, we’re making money,” he said. “Why would I want to limit that?”

Anyone who agrees with that premise should continue to read below. If not, feel free to move on to the next CPA Trendlines article or the NY Times short crossword.

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Bill Penczak: Stop Forcing Smart People to Do Stupid Work

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Challenge your people and keep the work interesting or risk losing them. 

Subscribe to CPA Trendlines podcasts anywhere: Apple, Google, Spotify, iHeart, Deezer, Amazon Music and Audible, Player FM, Audacy, Gaana (India), and Boomplay (Africa).

The Disruptors
With Liz Farr

Too many accounting firms have “smart people doing stupid work,” according to Bill Penczak, a veteran sales and marketing professional. The founder and chief insights officer for Mica Ventures said to think about the effort it takes to get an accounting degree and get your CPA, and contrast that with the years of mindless work that many new hires are required to do, especially if they go into audit, he said. “One of the reasons why there’s such a talent shortage is because the market has figured this out,” and no one wants to do that stupid work, Penczak said.

MORE PODCASTS and VIDEOS: Sandra Wiley: Staffing Problem? Check Your Culture | Scott Scarano: First, Grow People. Then Firm Growth Can Follow | Jody Padar: Build a Practice that Works for You, Not Vice-Versa | Ira Rosenbloom: With M&A, Nobody Wants a Fixer-Upper | Peter Margaritis: The Power Skills Every Accountant Needs | Joe Montgomery: Find the Sweet Spot of the Right Clients, Right Services and Right Prices | Marie Green: Your Bad Apples Are Ruining You | Megan Genest Tarnow: Hire for Curiosity Rather Than Compliance | Clayton Oates: One Way to Keep Clients for Life | Randy Crabtree: Follow These Three Rules to Keep Employees Happy | Erik Solbakken: Yes, You Can Work Less and Make More | Donny Shimamoto: Future Firm Growth Requires a Mindshift | Jennifer Wilson: Empower Young Workers to Build the Firm Everyone Loves | Mike Whitmire: Re-Think Your Hiring and Training Practices | Hector Garcia: Success Strategies of a Quickbooks YouTube Superstar | Blake Oliver: Why Tax Work Yearns To Be Free| Private Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  | Accounting Nerds, Unlock Your Super Powers  | Disruptor: Jason Statts Shakes Up the Status Quo | Think Small to Think Big with Matt Wilkinson | When Financial Statements Go Extinct with Corey Schmidt | Can Geraldine Carter Save Accountants from Themselves? | Re-Inventing Accounting with Tyler Anderson

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Besides making smart people do stupid work, Penczak said many of the firms he works with are realizing that they need to do a better job with mentoring and career development, as well as simply having more conversations with their people.

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